The Beginners Guide To Lenders (Chapter 1)

A Look at Personal Loans

Personal loans are general purpose loans that are offered by banks. You can utilize this type of loan for stuff like unconsolidated debt, a home improvement project and unexpected expenses. There are unsecured as well as secured personal loans.

For unsecured loans, the borrower doesn’t need to provide any asset as collateral. This means that, if you default payment, the lender can’t seize your property. If you’re unable to complete paying the loan, the lender has no property to seize. The lender, however, can try other collection actions. This includes reporting you to credit bureaus, filing a lawsuit against you and using a collection agency.

Conversely, a secured loan is protected by an asset. If you can’t pay back your personal loan, the lender can seize your asset as payment. Items provided as collateral can include houses, cars, business assets and land title deeds.
The Ultimate Guide to Lenders

The range for personal loans is between $1,000 and $50,000. The personal loan amount you get depends on your income, the lender and your credit rating. You qualify to borrow more money if you have a good credit score and a large income.
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Personal loans come with fixed interest rates. The interest rates depend on the credit rating. If you have a good credit score, you may get lower interest rates. This means you get to pay less in addition to what you borrowed. Some personal loans come with variable interest rates. Thus, the interest rate changes from time to time causing your payment to fluctuate. It’s harder to budget for a personal loan that comes with an unpredictable interest rate.

Usually, personal loans have a fixed repayment period. The loan period is provided in months. For example, you may be required to pay back in 60, 12, 48, 24 or 36 months. Sometimes, the interest rate depends on the repayment period. Usually, the longer the repayment period, the higher the interest rates. You can also get a pre-payment penalty. This is a fee charged for repaying the loan early. Stay away from loans that have pre-payment penalties.

Most banks report their customers’ loan account details to credit bureaus. Your credit score is included in the loan account information. Every step in the loan application process affects your credit. To maintain a good credit score, make your loan payments on time.

When applying for loans, check for any hidden or additional fees and scams. Avoid a loan from a lender that requires you to send cash in order to secure a loan. Also, some lenders charge added fees for their services. Therefore, it’s a good thing to look out for extra fees before you take a loan. Carefully read the loan’s terms and conditions to find out any additional or extra charges.